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The link between service privatization and price distribution among consumer types: municipal water services in the Spanish region of Catalonia

  • Antonio Miralles

In the Spanish region of Catalonia the industrial sector sensibly lobbied for the privatization of municipality-produced water services in the period 1996 – 2002. This paper analyzes the extent to which this result is consequent with observed measures of cross-subsidies in favor of residential consumers. I run a treatment-effects regression on a sample of 133 municipalities in 2000 and 2001. Recent privatization has a positive effect on the weight that the local regulator attaches to industrial users’ welfare when deciding water tariffs. I conclude that an increase of industrial customers’ group size has a twofold effect on the cross-subsidy in favor of residential customers: a direct positive substitution effect and an indirect negative political support effect through lobbying for service privatization.

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Article provided by Pion Ltd, London in its journal Environment and Planning C: Government and Policy.

Volume (Year): 26 (2008)
Issue (Month): 1 (February)
Pages: 159-172

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Handle: RePEc:pio:envirc:v:26:y:2008:i:1:p:159-172
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